[KOSPI 3000] The Main Actor is Indeed the 'Donghak Ants'... Achieved '3000'

From November 23 Last Year to the Day Before, Individual Investors Net Purchased a Total of 7.6905 Trillion KRW

Photo by Yonhap News

[Asia Economy Reporter Geum Bo-ryeong] Individual investors, known as 'Donghak Ants,' have played a significant role in supporting the domestic stock market and ushering in the 'KOSPI 3000' era.

According to the Korea Exchange on the 6th, on the first trading day of 2021, January 4th, individual investors net purchased stocks worth 1.031 trillion KRW in the KOSPI market. The KOSPI index closed at 2,944.45, up 2.47% (70.98 points) from the previous trading day, marking the first time in domestic stock market history that the 2,900 level was surpassed. On the same day, institutional investors net sold stocks worth 1.1899 trillion KRW, opposite to the individual investors. The situation was similar the previous day. When the market closed at 2,990.57, individual investors bought stocks worth 728.4 billion KRW, while institutional and foreign investors sold 536.3 billion KRW and 208.9 billion KRW, respectively.

The KOSPI broke its previous record by closing at 2,602.59 on November 23 last year. Before that, the highest KOSPI level was 2,598.19, reached on January 29, 2018. Since then, the KOSPI has continued to rise steadily until it surpassed the 2,900 mark the day before. On December 4, it crossed 2,700, and on December 24, it exceeded 2,800, continuously making new history. From November 23 to the day before, over 29 trading days, the index rose on all but eight days.

While the KOSPI surged rapidly, individual investors maintained their net buying trend. From November 23 last year, when the index surpassed 2,600, until the day before, individual investors accumulated a total of 7.6905 trillion KRW worth of stocks. In contrast, foreign and institutional investors net sold 2.3109 trillion KRW and 5.4608 trillion KRW, respectively, during the same period.

The 'ants' demonstrated their strength multiple times. On November 30 last year, they set a record for the highest daily net purchase by buying stocks worth 2.2206 trillion KRW in a single day. That day, foreign investors net sold stocks worth 2.4378 trillion KRW. Individual investors absorbed the foreign selling volume. On the ex-dividend date of December 29, individual investors also made the second-highest daily net purchase by buying 2.197 trillion KRW worth of stocks. Although they net sold a total of 2.135 trillion KRW over three trading days from December 23 to 28 to avoid the major shareholder capital gains tax, they repurchased the same amount in just one day.

Individual investors particularly focused on investing in Samsung Electronics. From November 23 until the day before, Samsung Electronics was the top stock in terms of net purchases by individual investors. The second was Samsung Electronics Preferred Shares (Samsung Electronics 우). During this period, individual investors net purchased 4.4936 trillion KRW and 2.8043 trillion KRW worth of Samsung Electronics and Samsung Electronics Preferred Shares, respectively.

The stock fever among individual investors is also evident in securities firms' Comprehensive Asset Management Accounts (CMA). According to the Korea Financial Investment Association, the individual CMA balance was 45.4301 trillion KRW on January 2 last year, slightly decreasing to 44.764 trillion KRW on March 19 when the KOSPI index dropped to the 1,400 level, but then increased steadily to 56.8157 trillion KRW on December 1. On January 4, it rose further to 58.5879 trillion KRW. The number of individual CMA accounts also steadily increased from 15,964,469 on January 2 last year to surpass 20 million on December 3. On January 4, it was confirmed at 20,739,681 accounts. Investor deposits (excluding margin deposits for on-exchange derivatives trading) more than doubled from 29.8599 trillion KRW on January 2 last year to 68.2873 trillion KRW on January 4.

The so-called 'money move' phenomenon, where large sums of money with no place to go due to continued low interest rates and real estate regulations flow into the securities market, is expected to continue for the time being. The Bank of Korea lowered the base interest rate from 1.25% to 0.75% in March last year to stimulate the economy amid the spread of COVID-19, and further cut it by 0.25 percentage points in May, bringing the base rate to a record low of 0.50%. In the '2021 Monetary and Credit Policy Direction' announced on December 25, the Bank of Korea stated it would maintain the accommodative base rate policy.

The launch of mobile trading systems (MTS) by fintech companies and the introduction of differentiated financial product sales channels are also likely to encourage individual investors to expand their trading activities. Kakao Pay Securities and Toss Securities plan to launch MTS platforms this year. They are expected to target individual investors based on their Kakao Pay and Toss subscriber bases to increase market share.